I understand why you'd choose Morrowind (someone chose Oblivion before for MM7), but as I see it, it doesn't just limit the game graphically, but also the ability to recreate some parts of MM6.
Like having a party, being the obvious one, though not that important as many enjoys playing MM6-8 as a solo character.

Another thing is the big juicy item art, which I find quite important.
And being able to slay a hoard of enemies and just walk through speed-looting *ka-ching-ching-ching*, hehe.
And having LOTS of LOOT as well! that's what makes an action-RPG!

It being so actiony as well as requiring some slower action (reconsidering, evaluating) at times is what makes it so enjoyable to me.

I think you'd have to chose a pure game engine to replicate it better. It will require learning quite a bit, but it would be worth it.
Also, the Morrowind Construction Set looks very clumsy, and I doubt you'd miss it after learning a proper game engine.
It will take a while to get even the basic RPG elements in, sure, but the results will be more satisfying.
But you might find the Morrowind RPG system sufficient, and just want to add content to it. So it would be fine.
But for this course, I'd recommend just making New Sorpigal and the surrounding lands richer with content.
Or you'll end up with a game like MM9, which is extremely sparse, and misses a lot of simple things which made the earlier games great.

Well, in any case, let your creativity flow, and ever make progress, and you will end up with something you can be proud of.